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JERA plans $11 billion capex over 4 years as Russia drives low carbon focus

JERA plans $11 billion capex over 4 years as Russia drives low carbon focus

FILE PHOTO: Coal piles are seen at JERA's Hekinan thermal power station in Hekinan, central Japan October 18, 2021. Picture taken October 18, 2021. REUTERS/Yuka Obayashi/

TOKYO : Japan's biggest power generator JERA said on Thursday it will invest 1.4 trillion yen ($11 billion) over the next four years to expand overseas assets and cut carbon emissions, a trend it expects to accelerate following Russia's invasion of Ukraine.

The company set a goal to reduce carbon dioxide emissions from its domestic business by 60 per cent or more by 2035 versus 2013 levels, mainly by using ammonia and hydrogen as a fuel for thermal power plants.

"The global decarbonisation trend will be accelerated by the Russia-Ukraine conflict," JERA President Satoshi Onoda told a news conference, saying the company will spend 650 billion yen on decarbonisation between now and March 2026.

Since Russia invaded Ukraine on Feb. 24, countries have been struggling to reduce dependency on Russian fossil fuels and JERA is also assessing its options.

To help secure energy supply in Europe, JERA has diverted six cargoes, or about 400,000 tonnes, of liquefied natural gas (LNG) to Europe in March and April, Onoda said.

JERA, Japan's biggest buyer of LNG, bought 30 million tonnes for domestic use, including a record 4.5 million tonnes on the spot market in the year ended March 31, Onoda said.

"We have already secured a fairly large volume of LNG for this year in anticipation of a similar situation to last year," he said, adding further procurement may be sought in coordination with the Japanese government.

Apart from the investment in decarbonisation, the capital expenditure announced on Thursday includes 250 billion yen for power generation and fuel businesses overseas to boost its net profit to 200 billion yen in the 2025 financial year from 24.6 billion yen in the year just ended.

JERA buys about 10 per cent of its LNG and thermal coal from Russia, and will decide on future procurement of Russian LNG in line with the government's policy, he said.

JERA will not renew its term contract for Russian coal when the existing deal ends, another executive said.

The decarbonisation goals, however, will not exclude reliance on gas as Japan struggles with possible power shortages, especially in the Tokyo area.

JERA has decided to resume operation at the No.1 unit at the Sodegaura gas-fired power plant in Chiba, near Tokyo, which was under a long-term planned shutdown.

It may also restart two units at the Anegasaki gas-fired power station in Chiba if there are auctions to seek extra power generation capacity, Onoda said.

($1 = 128.6900 yen)

Source: Reuters

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